7 ms·

"Upvoters have a duty to explain how they calculated their proposed minimum possible livable wage wage: i.e. what calculations you ran to show this proposal is

by nieve 6y ago

"Upvoters have a duty to explain how they calculated their proposed minimum possible livable wage wage: i.e. what calculations you ran to show this proposal is profit-maximizing at exactly 15$ or whatever, not 16$ or 50$."

CryptoPunk 6y ago
Profit maximizing would be slavery with $0 wages. But social utility maximizing is the price that emerges spontaneously when people are free to broadcast job offers and to contract, that is set by supply and demand: https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand
- AstralStorm 6y ago
  Unfortunately for us, there is no such thing as free market. Deregulated markets devolve into might makes right (by size), regulated ones are facing the problem of justification for everything. In terms of wages, the markets in the US are extremely deregulated, in addition to lobbying messing with the politics. Somehow actual solutions are presented as less free market when they don't actually impact how trades are made. Big corporations can always undercut small companies on costs by investing into capital expensive technologies. Does it mean the smaller companies should be allowed to run wage slavery? No, because then we run into arbitrary wage differentiation. The proper way to evaluate the minimum wage is to compute local Purchasing Power Parity, check how many PPP-dollars are required for life, then set the minimum wage at slightly higher level to compensate for how rarely it is adjusted. These numbers will be a bit different per state in plain US dollars. Anything else is not a living wage, and a living wage is the only reasonable way of approaching it. From capitalist point of view, a business that cannot supply a minimum wage is insufficiently competitive and should fail. It is trying to run feudal by creating wage slaves. Alternative approach would be interventions to lower PPP-adjusted cost of living, such as building cheap or free housing, not means tested food stamps, free healthcare, free education etc. But these are much less predictable, and put the onus on government, while at the same time allowing bigger corporations to undercut their salaries, so it is at best a part of a combined approach.
  - CryptoPunk 6y ago
    >>Deregulated markets devolve into might makes right (by size), regulated ones are facing the problem of justification for everything. The existence of regulatory restrictions on free market exchange, that distort the free market, will rarely justify further regulatory infringements on contract rights, like the minimum wage. The additional regulatory restriction will generally add to, and not counter-act, the existing market distortions. >>The proper way to evaluate the minimum wage is to compute local Purchasing Power Parity, check how many PPP-dollars are required for life, then set the minimum wage at slightly higher level to compensate for how rarely it is adjusted. These numbers will be a bit different per state in plain US dollars. That in no way determines if a price floor of labor will do harm to public welfare and the economy. >>From capitalist point of view, a business that cannot supply a minimum wage is insufficiently competitive and should fail. That is not a "capitalist point of view". It's just a pure economic fallacy that harms all those who are priced out of work, and capital that is less efficiently utilized as a result. I recommend you read the Wikipedia article on price floors: https://en.wikipedia.org/wiki/Price_floor https://en.wikipedia.org/wiki/Price_floor And then consider how a price floor would affect available labor.
    - AstralStorm 6y ago
      But what effect would lack of price floor have on labor? You guessed it right, serfdom. The ultimate "capitalist" system. Labor is not a typical price elastic product, when it is required to live, its price is relatively inelastic. The capitalist always has a way to drive the cost of labor down, whether it is by overloading workers or not. The workers do not have the means to negotiate hiring price in most instances, so equilibrium analysis does not apply either way. One side has a smooth choice, the other has barely a binary choice, and ofte not even that. Setting a price floor on a price inelastic good will not increase the price because people will not buy/sell less of it. Demand and supply is unchanged. Additionally, employers are not buying people's labor off a market. There's not a "list of all employees where they set the price they want to work for" which would be required for employment to be an actual market. When an employee cannot set the price, market price discovery just does not work by definition. The "job market" is a glib lie. Only the employers compete, but employees do not. And employers do everything to prevent price discovery or make their option the only possible one. Ever heard of work rules to not share your wage with coworkers? Is that compatible with free market?
- epivosism 6y ago
  Not sure I agree - total profits and living standards have both gone up drastically since slavery was abolished, and went up faster and farther in countries that abolished slavery earlier. Thinking that slavery is profit-maximizing is very zero-sum, and disproven by history. Actual profit maximization over time involves lots of freedom and choices for individuals participating in capitalism.
  - epivosism 6y ago
    Map of the timeline of the abolition of slavery - clear link between current prosperity and the time of abolition: https://upload.wikimedia.org/wikipedia/commons/thumb/9/92/Slavery_abolition.svg/2560px-Slavery_abolition.svg.png https://upload.wikimedia.org/wikipedia/commons/thumb/9/92/Sl... The outliers (Saudi Arabia 1962, despite current wealth) are due to resource extraction, not truly positive sum freedom + capitalism.
  - CryptoPunk 6y ago
    Yes, I meant in the short-term, in the context of a single firm being able to practice it, and how it would affect its profit margins. In the long run both wage maximization and profit maximization aligns with social utility maximization, which we achieve through the establishment of a free market where all interactions are mutually voluntary.
epivosism 6y ago
Not sure who is downvoting everything on the other side in this discussion. I'm not saying that I'm against minimum wages - just that to credibly propose them, it would help to explain why you don't set it at $50. I think for social good it really might be the case that 15$ is reasonable; but the argument "I want to raise the minimum wage because I care about doing good-looking things for people" receives extra points in debate because it looks virtuous, and will tend to be overvalued. Similar proposals like "Punish X crime more harshly" or the opposite "Let's let people out of jail early out of mercy", or "let's just make food free" also sound good initially, and are totally valid policies to consider - once we include all the hidden costs in the calculation of whether it would actually help!
epivosism 6y ago
I think this is just an implementation issue; I'm totally fine with the government paying a living wage to people if they have the money. The issue here is the law actually gives employers a choice: "pay living wage" or "pay nothing by not hiring someone" and I'm afraid they'll choose the latter too often. I'm worried that if you set the living wage too high, you'll push employers to take that choice more often; it'll be a nice-looking policy, but more people might be suffering. A proposal which eliminated the "don't hire someone" choice would be more effective - either Earned-income tax credit (where employers truly compete economically, and the government fills in the salary gap up to a living wage), or direct employment by government. Both of those are less distortionary and I think achieve both of our goals - people having enough money to have good lives.

by nieve 6y ago

CryptoPunk 6y ago

Profit maximizing would be slavery with $0 wages. But social utility maximizing is the price that emerges spontaneously when people are free to broadcast job offers and to contract, that is set by supply and demand: https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand

AstralStorm 6y ago
Unfortunately for us, there is no such thing as free market. Deregulated markets devolve into might makes right (by size), regulated ones are facing the problem of justification for everything. In terms of wages, the markets in the US are extremely deregulated, in addition to lobbying messing with the politics. Somehow actual solutions are presented as less free market when they don't actually impact how trades are made. Big corporations can always undercut small companies on costs by investing into capital expensive technologies. Does it mean the smaller companies should be allowed to run wage slavery? No, because then we run into arbitrary wage differentiation. The proper way to evaluate the minimum wage is to compute local Purchasing Power Parity, check how many PPP-dollars are required for life, then set the minimum wage at slightly higher level to compensate for how rarely it is adjusted. These numbers will be a bit different per state in plain US dollars. Anything else is not a living wage, and a living wage is the only reasonable way of approaching it. From capitalist point of view, a business that cannot supply a minimum wage is insufficiently competitive and should fail. It is trying to run feudal by creating wage slaves. Alternative approach would be interventions to lower PPP-adjusted cost of living, such as building cheap or free housing, not means tested food stamps, free healthcare, free education etc. But these are much less predictable, and put the onus on government, while at the same time allowing bigger corporations to undercut their salaries, so it is at best a part of a combined approach.
- CryptoPunk 6y ago
  >>Deregulated markets devolve into might makes right (by size), regulated ones are facing the problem of justification for everything. The existence of regulatory restrictions on free market exchange, that distort the free market, will rarely justify further regulatory infringements on contract rights, like the minimum wage. The additional regulatory restriction will generally add to, and not counter-act, the existing market distortions. >>The proper way to evaluate the minimum wage is to compute local Purchasing Power Parity, check how many PPP-dollars are required for life, then set the minimum wage at slightly higher level to compensate for how rarely it is adjusted. These numbers will be a bit different per state in plain US dollars. That in no way determines if a price floor of labor will do harm to public welfare and the economy. >>From capitalist point of view, a business that cannot supply a minimum wage is insufficiently competitive and should fail. That is not a "capitalist point of view". It's just a pure economic fallacy that harms all those who are priced out of work, and capital that is less efficiently utilized as a result. I recommend you read the Wikipedia article on price floors: https://en.wikipedia.org/wiki/Price_floor https://en.wikipedia.org/wiki/Price_floor And then consider how a price floor would affect available labor.
  - AstralStorm 6y ago
    But what effect would lack of price floor have on labor? You guessed it right, serfdom. The ultimate "capitalist" system. Labor is not a typical price elastic product, when it is required to live, its price is relatively inelastic. The capitalist always has a way to drive the cost of labor down, whether it is by overloading workers or not. The workers do not have the means to negotiate hiring price in most instances, so equilibrium analysis does not apply either way. One side has a smooth choice, the other has barely a binary choice, and ofte not even that. Setting a price floor on a price inelastic good will not increase the price because people will not buy/sell less of it. Demand and supply is unchanged. Additionally, employers are not buying people's labor off a market. There's not a "list of all employees where they set the price they want to work for" which would be required for employment to be an actual market. When an employee cannot set the price, market price discovery just does not work by definition. The "job market" is a glib lie. Only the employers compete, but employees do not. And employers do everything to prevent price discovery or make their option the only possible one. Ever heard of work rules to not share your wage with coworkers? Is that compatible with free market?
epivosism 6y ago
Not sure I agree - total profits and living standards have both gone up drastically since slavery was abolished, and went up faster and farther in countries that abolished slavery earlier. Thinking that slavery is profit-maximizing is very zero-sum, and disproven by history. Actual profit maximization over time involves lots of freedom and choices for individuals participating in capitalism.
- epivosism 6y ago
  Map of the timeline of the abolition of slavery - clear link between current prosperity and the time of abolition: https://upload.wikimedia.org/wikipedia/commons/thumb/9/92/Slavery_abolition.svg/2560px-Slavery_abolition.svg.png https://upload.wikimedia.org/wikipedia/commons/thumb/9/92/Sl... The outliers (Saudi Arabia 1962, despite current wealth) are due to resource extraction, not truly positive sum freedom + capitalism.
- CryptoPunk 6y ago
  Yes, I meant in the short-term, in the context of a single firm being able to practice it, and how it would affect its profit margins. In the long run both wage maximization and profit maximization aligns with social utility maximization, which we achieve through the establishment of a free market where all interactions are mutually voluntary.

epivosism 6y ago

Not sure who is downvoting everything on the other side in this discussion. I'm not saying that I'm against minimum wages - just that to credibly propose them, it would help to explain why you don't set it at $50. I think for social good it really might be the case that 15$ is reasonable; but the argument "I want to raise the minimum wage because I care about doing good-looking things for people" receives extra points in debate because it looks virtuous, and will tend to be overvalued. Similar proposals like "Punish X crime more harshly" or the opposite "Let's let people out of jail early out of mercy", or "let's just make food free" also sound good initially, and are totally valid policies to consider - once we include all the hidden costs in the calculation of whether it would actually help!

epivosism 6y ago

I think this is just an implementation issue; I'm totally fine with the government paying a living wage to people if they have the money. The issue here is the law actually gives employers a choice: "pay living wage" or "pay nothing by not hiring someone" and I'm afraid they'll choose the latter too often. I'm worried that if you set the living wage too high, you'll push employers to take that choice more often; it'll be a nice-looking policy, but more people might be suffering. A proposal which eliminated the "don't hire someone" choice would be more effective - either Earned-income tax credit (where employers truly compete economically, and the government fills in the salary gap up to a living wage), or direct employment by government. Both of those are less distortionary and I think achieve both of our goals - people having enough money to have good lives.